By Justin Miller | Sep 26, 2017
Target, one of the largest retail employers in the country, announced Monday that it will raise its minimum wage for employees to $11 an hour starting in October, and gradually increase it to $15 an hour by the end of 2020. The new standard applies to Target’s 323,000 regular employees as well as to the 100,000 seasonal workers it plans to hire for the holiday season.
Clearly, Target realizes that the way to attract workers (and reduce turnover) in a tight labor market is not to gripe and moan about a supposed labor shortage but to bump up pay. As the Federal Reserve of Minneapolis President Neel Kashkari put it, “If you’re not raising wages, then it just sounds like whining.”
Walmart’s decision to raise its pay to $10 an hour last year prompted Target to follow suit. Company officials initially required new employees to complete a six-month “training” period before receiving that wage rate. After intense public criticism, they shortened that period to 90 days. Other employers took to the high road years ago. Costco has for several years now paid a starting wage of $11.50 an hour with average wages reaching $21 an hour. The retailer also offers health care to most employees.
But Walmart has more power than any American company to lift up wage standards across the economy. With nearly 1.5 million employees in the United States, Walmart is the largest employer in the country. Yet, Walmart has thus far resisted calls to go higher than $10 an hour. It is nearly impossible to make a living on that kind of wage, especially if you’re working part-time—as many Walmart employees do.
The retail behemoth’s low wages, which force its employees to rely on public assistance programs, cost taxpayers an estimated $6.2 billion in 2013. Employers who insist on taking the low-wage road act as parasites and end up costing taxpayers $152.8 billion every year, according to a 2015 study by the University of California, Berkeley Labor Center.
Target is taking a step in the right direction by getting on a path to $15 an hour. Walmart should follow suit. It can certainly afford to pay its workers more money. In recent years, the company has bought back about $50 billion of its shares, funneling those profits into the Walton family fortune rather than into workers’ pockets.
By paying at least $15 an hour, the company would not only be treating its own employees fairly; it would be lifting up wage standards throughout the economy. To focus the minds of company officials at Walmart and elsewhere, a group of House Democrats have kickstarted an idea: levy a fee on companies equivalent to the amount of public assistance its employees are eligible to receive, since their employers can’t be bothered to pay them fairly in the first place.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.
In the wake of GOP-led attacks on workers, a long-time nurses union president thinks bold politics will win back voters in the Heartland.Justin MillerSep 26, 2017
The president and GOP leaders would have you believe their tax cuts will help the middle class, not the rich. Reality would suggest otherwise.Justin MillerSep 21, 2017
His appointees made their bones on the management side of the table.Justin MillerSep 19, 2017
By Justin Miller | Aug 24, 2017
Republicans are taking their corporate tax-cut campaign on the road. House Speaker Paul Ryan visited airplane manufacturer Boeing on Thursday in Washington state, where he lamented how the company is quivering underneath the weight of a 35 percent tax rate. Meanwhile, Ways & Means Chair Kevin Brady sang the same song at telecom giant AT&T’s headquarters in Dallas.
There’s just one problem. Neither of these corporations pays the statutory 35 percent tax rate for corporations. Over the past eight years, Boeing has paid an effective tax rate of just 5.4 percent on its profits while AT&T has paid 8.1 percent, according to a report by the Institute on Taxation and Economic Policy. In fact, it’d be quite hard for Ryan to find a company to visit that actually does pay the full rate. Most corporations pay nowhere near the full rate thanks to a bevy of tax breaks and loopholes—the average is closer to 20 percent, though even that varies tremendously by industry.
Ryan and other GOP leaders want to shave the statutory rate down to 20 percent while President Donald Trump wants it reduced to 15 percent. Neither has given any indication as to whether their idea of corporate tax reform includes closing loopholes. They simply contend that cutting the rates will make American manufacturers more competitive with foreign companies, and will use the money they save to invest domestically in research and development, which will in turn drive economic growth and create jobs.
But through federal and state subsidies and tax breaks, corporations like Boeing and AT&T have for years benefited from a low effective tax rate. As ITEP’s Matthew Gardner explains, Boeing has received a tax refund in five of the past ten years. It saves itself $542 million a year using a special domestic manufacturing tax break, and $1.8 billion in further cuts thanks to a research and development tax credit. Boeing also benefits from the immensely favorable depreciation schedules on capital that has saved it billions of dollars over the past decade.
Boeing also entered into a $9 billion tax incentive deal with Washington state back in 2013—the largest corporate subsidy ever—to “maintain and grow its workforce within the state.” But, as Michael Hiltzik points out in the Los Angeles Times, the company has since cut nearly 13,000 jobs (about 15 percent of its Washington workforce) as it sets up shop in cheaper states that offer incentives of their own.
It still manages to enrich its shareholders though. On the same day that it announced a production slowdown in December, Hiltzik notes, Boeing also announced a 30 percent increase in its quarterly dividend and a new $14 billion share-buyback program.
The current corporate tax system doesn’t incentivize job creation. Rather, it incentivizes the enrichment of CEOs and shareholders. Simply cutting the rate without closing loopholes or including clear economic-development requirements will only further advance shareholder capitalism, to the detriment of just about everyone else.
Ryan's and Brady’s visits to Boeing and AT&T expose the core lie behind their corporate tax-cut agenda. Corporations are already benefiting from lower rates—and they sure aren’t using the extra money to create jobs.